The International Monetary Fund warns of an increase in Dutch mortgage defaults – Wel.nl

The International Monetary Fund warns that the sharp rise in mortgage rates around the world may mean that more and more homeowners will be unable to cover their monthly costs. The Netherlands is not immune to this either.

Interest costs rise dramatically

They also reported that interest rates may rise further next year, because the specter of inflation has not yet been curbed. “Interest rates on residential mortgages, generally the largest category of loans to households, are now much higher than they were a year ago,” explains Tobias Adrian, an economist at the International Monetary Fund. As a result, people have to bring in more and more of their own savings in order to be able to take out a mortgage, while house prices and the number of house sales are under pressure.

The Netherlands is in relatively good shape

However, the Netherlands is in relatively good shape compared to many other countries, such as the United States, Canada, the United Kingdom and Sweden, because mortgage standards have become more stringent in recent years and household debt is no longer as high as it was during the financial crisis in 2008. People often choose Dutch homeowners lock in their mortgage interest rate for a longer period.

A wave of defaults is coming

But Adrian does not rule out a future wave of defaults in our country either. The reserves available to many families have become depleted, as shown by the figures related to savings balances. He warns that there are signs of increased delinquencies on credit cards and car loans.

Businesses and governments are also affected

Businesses and governments are also struggling to cover rising interest costs on loans. De Nederlandsche Bank (DNB) also said on Monday that risks to financial stability are increasing due to higher interest rates. Banks in the Netherlands called for caution. Rising interest rates have a delayed effect on firms’ and households’ financing costs. “This leaves banks vulnerable to potential losses in the future,” a DNB spokesman said.